Individual savers will soon be able to access a green savings bond, which is described by NS&I as allowing UK savers to contribute towards projects that will accelerate the transition to a low carbon economy, create green jobs, and support the collective effort to tackle climate change. People keen to play their part in fighting the climate emergency will also feel secure in the fact that saving this way is 100% backed by the government. NS&I will publish details of the Green Saving Account later this year.
The standard NS&I ISA rate (at time of writing) currently stands at 0.1%, with other accounts attracting 0.01% interest against a CPIH inflation rate of 0.9%, meaning no real return. Green credentials may give savers some compensation for what may also be very low returns, but not all will take a purely altruistic view of where to put their money. The good news is that there are other options and by bringing “green saving” more mainstream, NS&I’s offering may also prompt savers to look beyond the best headline returns and biggest players to see how their money can work for good.
If this has piqued interest in green saving, it is worth considering the options already out there, many with higher rates than NS&I’s current rates. Finance for the Future Award winner Ecology Building Society offers a range of options, as do others such as Triodos and Tandem.
Pension changes: double reward?
As well as providing individual savers with access to government backed green savings, the Budget also sets out the intention to create more flexibility for pension schemes to invest in illiquid assets. This change could allow pension funds greater freedom to invest in green infrastructure and innovation.
To make this possible, the government will consult in April on the operation of the charge cap to see whether certain costs within the cap mean schemes are less able to invest in certain asset classes, which could include ones generating a better return for pension investments as well as green investments. This dual benefit would be a particular win at a time when the climate emergency is becoming more acute, and many savers may be behind where they otherwise would have been on pension contributions due to the effects of the pandemic.
Young people, who have been hardest hit by pandemic-related unemployment, with 287,000 fewer payrolled 18-24s in February 2021 compared with the previous year, will benefit from such initiatives, which go some way to making up pension savings they will have missed whilst out of employment. They are also the cohort referred to by some as “Generation Green” and who governments, businesses and financial services are increasingly listening to, so as to avoid alienating the next generation of customers.
For more information on the March 2021 Budget visit ICAEW’s Budget page or subscribing to the ICAEW Daily email by clicking the ‘Daily’ option in your preference centre.
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